Vale agrees to build a pellet plant in Saudi Arabia

Saudi Arabia's National Industrial Development Center (NIDC) has signed a MoU with Vale to set up a 4 million tpa high quality iron ore pellet plant in the industrial city of Ras Al Khair. The site on the east coast of the kingdom will also have a logistics center.

The investment is in line with Saudi Arabia's recently announced National Industrial Strategy and is a result of growing steel demand in Saudi Arabia.

The project aims to secure a sustainable supply of raw materials at an estimated investment cost of 4 billion Saudi Riyals ($1.06 billion). It will initially create 400 direct jobs.

“With strong economic growth in the construction and industrial sectors in the Kingdom, domestic demand for steel is growing rapidly as additional production capacity is needed to meet the growing demand. NIDC, under the leadership of MIM [Ministry of Industry and Mineral Resources], has identified more than 5 million tons of steel per year to be added to the Kingdom's industrial base, which already has an annual capacity of over 16 million tons,” NIDC said in a statement.

“The new capacity will support new steel products targeted at cutting-edge industries such as military, packaging, shipbuilding, oil and gas, automotive and others. Iron ore pellets, the main raw material for steel production, have been identified by NIDC as a critical ingredient. to ensure an uninterrupted supply of raw materials for the local industry. They [NIDC] have worked with international partners to develop local iron ore pellet production capacities,” the conclusion reads.

“This is a wise decision and a move, because if implemented, the plant will provide the majority of Saudi Arabia's direct reduced iron production,” said a local senior plant official.

In 2021, Saudi Arabia was the fourth largest producer of DRI behind India, Iran and Russia with a production of 6.4 million tonnes.

At the MoU signing ceremony, NIDC was represented by its Executive Director, Dr. Abdulrahman Al-Kurtas, and Vale was represented by its CEO, Eduardo Bartolomeo.

Vale already has 11 Mtpa iron ore pellet production capacity in Oman.

In order to diversify and secure the supply of raw materials, Sabic entered into a Mauritanian iron ore mining joint venture with local authorities to supply its subsidiary and Saudi Arabia's largest steelmaker, Hadeed. The first batch of ore is to be shipped by 2024 (see Kallanish passim). It will produce up to 10 million tons per year of DR grade pellets with an iron content of 67-68% and less than 2% silica from magnetite iron ore with an iron content of 35-38%.